Redcentric has provided an update on the forensic review following the discovery of misstated balances in the group’s balance sheet. The cumulative overstatement of net assets and profits after tax up to 30 September 2016 is c.£20.8m. Management currently believe that c.£5.9m of this misstatement (£4.7m at the EBITDA level) arose in the six months ended 30 September 2016. The group’s previous indications had been that all issues related to prior periods. H1’16 revenue is now expected to be c.£53.0m with EBITDA of c.£9.1m. The average net debt position over the past 8 months to November 2016 was £42.0m. This is materially higher than originally reported. The group expects to report its interim results before 31st December which will provide more detail on the forensic review and remedial action plan. Our forecasts and recommendation remain Under Review until the full detail can be released.
